Business, Economics and Jobs

AIG estimates its Sandy loss at $1.3 billion


People view damage in a neighborhood in the Breezy Point area of Queens in New York on October 30, 2012 after fire destroyed about 80 homes as a result of Hurricane Sandy which hit the area October 29.


Stan Honda

The insurance company American International Group said on Friday that it is expecting to take an after tax loss of at least $1.3 billion related to superstorm Sandy.

Reuters reports that New York-based AIG will contribute $1 billion from existing funds to its US property insurance subsidiaries to help cover the losses from the storm.

Sandy is expected to be the second costliest storm in history with a price tag of insurance losses expected to reach $25 billion.

The figure reported by AIG is far higher than other major insurers have said they expect to lose. According to AP, Travelers Cos. Inc. said on Wednesday that they expect a loss of $650 million from the storm after taxes and reinsurance recoveries.

Allstate Corp.,the largest publicly traded US home and auto insurer, told AP that it estimates a loss of $1.08 billion in catastrophe losses in October, mostly from damage to homes and cars from the superstorm that hit the Northeast late that month.

The figure is may climb even higher after all of the complexities of calculating the damage from the storm, AIG told Bloomberg that the costs could climb even higher.

“Due to the complexity of factors contributing to the losses, there can be no assurance that AIG’s ultimate losses associated with this storm will not differ from this estimate,” AIG said.

Losses from Sandy will far surpass the $574 million in catastrophic costs that hit AIG after Hurricane Irene struck in the third quarter last year, reports Bloomberg.

AIG said the losses would be reflected in the fourth quarter.